JS Earnings Call Notes 11.10.15 – Amerco, Priceline, Rockwell Automation

Amerco (UHAL) Principal Financial Officer Jason Berg said the company saw continued sequential revenue growth and volume growth during the quarter

“Operating earnings at the moving and storage segment increased $37 million to $297 million from another good quarter of revenue growth. Equipment rental revenues increased 7% or approximately $45 million.  We are continuing to see growth in transactions and revenues across both our truck and trailer fleets, as well as from the in-town and one-way moving markets.”

And they continued to add locations where you can utilize U-Haul equipment

“Our team continues to expand the distribution network, adding over 350 net new independent dealers, along with 30 new company-owned locations during the quarter.”

They’re also utilizing their existing fleet of moving trucks more efficiently

What’s happened this year is that the growth of the fleet has flattened out and we’re seeing improvements in efficiencies of the existing fleet.  We’re seeing improvements in utilization for truck. We’re seeing improvements in revenue per unit.  Things that we’ve done back-office wise is we try to increase truck availability through improving the repair and maintenance process so that we don’t have trucks down for as a longer period of time.”

They’ve been able to raise prices in the storage unit 

 In general across the country, I think our rates are up approximately 3%.”

Amerco (UHAL) Principal Financial Officer Jason Berg acknowledged they have a significant amount of excess cash on the balance sheet but they plan on reinvesting in various growth initiatives

We do continue to accumulate cash.  We have recently done dividends, but the focus of the organization right now continues to be in reinvesting back into the business. We’re going to be reinvesting in the fleet here in this fiscal year, at least toward the second half of the year, rotating the significant number of trucks back on.  And on the real estate side, all the new facilities that we’ve shown here during the quarter as well as a significant number of projects in the pipeline construction and development projects that over the next several years, we’ll certainly utilize at this point, a couple of hundred million dollars. So, I think we’ve earmarked growth as the primary use of the excess cash right now.  For this company, reinvestment has always been the great value creator for our shareholders over time versus other chances.  We’ve proven over time that by reinvesting in our core business, we can create returns for the shareholders over time.”

The company listened to the voice of the customer and increased the company’s offerings in the small truck space

We heard what the customer was saying and there was a need in the market for us to improve our service in the small sizes of the fleet and we’ve done that significantly.  So, on a percentage basis, if you were to look at the fleet, I think on a percentage basis, the smaller trucks are greater percentage than they were before.”





Priceline (PCLN) CEO Darren Huston said they helped clients book over 100 million hotel room nights in the quarter

Our customers booked accommodation reservations for over 115 million room nights in the quarter.”

And they continue to add hotels to their platform

“Booking.com’s platform now has over 820,000 hotels and other accommodations in 220 countries and territories, up 38% over last year.”

Priceline (PCLN) CEO Darren Huston they are launching a business traveler product

Following our successful launch of BookingSuite which continues to gain traction in the B2B arena, we recently introduced another important B2B innovation, Booking.com for Business. This new offering is geared to both the business traveler and the travel organizer. Our tools allow organizers to link travelers to the company account without losing oversight or to book on their behalf. Spending can be managed through budget filters and spending reports. All the company’s hotel reservations can be viewed and managed in one place. And best of all, all enrolled Booking.com for business travelers automatically benefit from our rewards program including closed user group discounts and special benefits at over 100,000 select properties worldwide.”

Along with many other multi-national companies, Priceline blamed currency volatility for reduced revenue

Throughout 2015, we’ve seen the strong U.S. dollar significantly impact our U.S. dollar reported results because about 90% of our gross bookings and operating income are generated by our international brands. Our two most impactful currencies, the euro and the British pound, were weaker by about 16% and 7% respectively for Q3 as compared to the prior year. Many other important currencies in which we transact were also significantly weaker versus the U.S. dollar this year in Q3 relative to last year.  The strong U.S. dollar means our gross bookings, gross profit, operating expenses, adjusted EBITDA and non-GAAP net income mathematically translate into significantly fewer dollars than they would have at last year’s exchange rates for Q3 and Q4.”

Management also asserted they have a mid-single digit market share of room night reservations that runs over their platform

“Now for Q4 guidance. We often get questions from analysts and investors trying to understand the size of the accommodation market and our share of room night reservations. Darren just pointed out that the accommodations on our websites have about 21 million rooms.  This math implies a mid-single digit market share, which I believe highlights the opportunity for us to continue to grow our share with existing partners, while our supply teams also continue to aggressively add new partners.”

Priceline (PCLN) CEO Darren Huston spoke about competing with AirBNB

Basically, in vacation rentals, we’re building a very different product than what Airbnb has, or what HomeAway has. And our whole business is based on no fees for consumer. So it wasn’t a strategic move. It’s just a reflection of the way that our business works, and we charge our accommodation partners between 12% and 15% commission, so that’s where the take rate is. When you’re in a classified ad business, it’s more difficult to get that kind of take rate from the accommodation partner, so many players will try to also charge a fee or increase fees to consumers.”

And they’ve been spending more and more of their advertising dollars with Facebook

“And then your next question on Facebook as a marketing platform, we have been doing more and more business with Facebook. Most of it though is in the category or re-messaging or re-targeting.”





Rockwell Automation (ROK) CEO Keith Nosbush said orders were weak during the preceeding quarter

Both sales and earnings came in below our expectations in the quarter. Organic sales declined a little over 2%. As we progressed through the quarter, conditions softened. And September was especially weak, particularly in the U.S. product businesses.”

He highlighted both China and the energy sector as notable spots of weakness

“The shortfall in the U.S. was broad-based across verticals but particularly in oil and gas. Heavy industry end markets, including oil and gas, have not stabilized, and we see continued softness in key emerging markets.  China was the other weak spot. Sales in China were flat compared to the third quarter, but came in a bit lower than expected.”

They noted a slowdown in spending by their U.S. based industrial customers

There appears to be a general slowdown in U.S. industrial customer spending, both capital and operating spending. And what we experienced in the U.S. market in Q4 seems to be consistent with what we have seen reported by other automation-related and electrical suppliers, including some of the major distribution companies.  So that’s why we’re cautious about how we’re approaching this because we don’t believe we’ve seen the bottom.”

Rockwell Automation (ROK) CEO Keith Nosbush said he expects to take market share from competitors due to new product launches 

And I also think some of our new products, we do expect next year to be able to take market share.  I think that’s how we look at our ability to demonstrate differentiation. And certainly, with our new technology and our new products, we expect as the year unfolds to be able to take share, even in a difficult market environment.”

They expect mining equipment orders to remain subdued

Mining will continue to be weak across all regions, with the commodity prices continuing to be down. And also you’re seeing a lot of restructuring in the larger global customers, and that tends to slow CapEx spending while that’s going on.”

They do expect to see strength in customer orders as some companies look to bring down their operating costs

“We do believe that they will continue to spend on driving down their operating costs. We believe we have some new technology that we’ll also be talking about at Automation Fair that enables us to create a much more productive oilfield as well as the ability to create more of helping them maintain their assets, their rotating equipment, which is very important in that industry with some capabilities in remote monitoring and in asset management capabilities of that equipment.”